Harvey Norman NZ annual sales fall 4% as group profitability plunges

Harvey Norman's New Zealand sales fell 4 percent in the latest financial year as the wider group's profit plunged on tough trading conditions in its electrical goods categories.

The Sydney-based retailer reported a 7 percent decline in group sales at its franchise stores to A$5.74 billion in the year ended June 30, led by an 8.1 percent drop in Australian revenue and a 4 percent decline in New Zealand. On a like-for-like basis, sales fell 7 percent and 4.7 percent respectively. The sales figure doesn't include its Singapore outlets.

Annual pretax profit fell 39 percent to A$227.6 million including a A$25 million writedown in the value of its property portfolio, the ASX-listed company said in a statement.

"Trading conditions continue to be challenged, coupled with deflationary headwinds, particularly in the technology categories," it said. "Home appliances, furniture and bedding remain stable and the businesses are well placed for any upturn in housing starts."

Harvey Norman's New Zealand first-half operating profit fell 0.4 percent to A$20.6 million as discounting of consumer electronics failed to revive spending appetite in the face of the Canterbury earthquakes and a weak labour market, the company re[ported in February.

The 1.7 percent annual appreciation in the New Zealand dollar had a positive impact on global sales, though a 6 percent deterioration in the euro and 4.7 percent fall in the pound offset those gains, the retailer said.

The shares fell 0.5 percent to A$1.96 on the ASX, and have gained 7.4 percent this year. The stock is rated an average 'hold' based on 13 analysts' recommendations compiled by Reuters, with a median target price A$1.90.

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